creativity thoughtfully unboxed

The Real Cost of Brand Infringement

by heatherthornswood on 16 Dec 2013

There has been quite a social media storm on the leading edge of the cycling industry. To quickly recap, bicycle giant Specialized threatened to sue the owner of a small bike shop called Cafe Roubaix Bicycle Studio for trademark infringement over his use of the name “Roubaix”. Specialized claims the name for one of their bicycles.

The owner, Dan Richter, opened his shop after being medically discharged from the Canadian military after over 20 years of service, suffering PTSD after serving in Kandahar, Afghanistan. He took his savings and various military payments he received, and expanded his operations from a wheel building business he ran from his garage, to a storefront.

The story hit a week ago Saturday, in the Calgary Herald, and a firestorm of outrage poured from social media with such intensity that it created and continues to sustain an active revulsion of the Specialized brand.

To be fair, it is expected that trademark owners should diligently protect their trademarks from infringement and other misuse. Specialized would do well to take a cue from another industry’s giant, Jack Daniel’s. When they discovered an author who had designed his book cover in such a way that it too closely mimicked the brands famous whiskey label, they sent the most polite cease and desist letter. So much so (and here we go again with social media…), that it was sent all over the world and covered by publications with massive readerships: The Atlantic, Forbes, The Huffington Post, Time.com and finally, Mashable.com and The Telegraph in the UK, both of which I cite here, just to name just a few.

I, being a passionate single malt scotch whiskey drinker, will certainly give Jack Daniels another look the next time I’m in the mood for a fine whiskey – I am now a fan, a swooning fan at that. Jack Daniels embraces and radiates class. In reference to the above incident, their Chief Trademark Counsel, David Gooder was quoted as, “There is no point using a sledgehammer to crack a nut.” I’m now a huge fan of David Gooder, too.

“We are certainly flattered by your affection for the brand, but while we can appreciate the pop culture appeal of Jack Daniel’s, we also have to be diligent to ensure that the Jack Daniel’s trademarks are used correctly. Given the brand’s popularity, it will probably come as no surprise that we come across designs like this on a regular basis. What may not be so apparent, however, is that if we allow uses like this one, we run the very real risk that our trademark will be weakened. As a fan of the brand, I’m sure that is not something you intended or would want to see happen.

“As an author, you can certainly understand our position and the need to contact you. You may even have run into similar problems with your own intellectual property.

“In order to resolve this matter, because you are both a Louisville “neighbor” and a fan of the brand, we simply request that you change the over design when the book is re-printed. If you would be willing to change the design sooner than that (including on the digital version), we would be willing to contribute a reasonable amount towards the costs of doing so. By taking this step, you will help us to ensure that the Jack Daniel’s brand will mean as much to future generations as it does today.”

Did we all not learn in college during our public speaking classes that the testimonial is one of, if not THE most powerful tool, of influence and persuasion? Social media is the instant and the ultimate in testimonial. In these high tech, highly connected times, brands should never forget nor take for granted that a news story can travel around the globe in seconds – and the court of public opinion has more sway and staying power than an actual court proceeding. Just look at Paula Deen: cleared of wrong doing in court, but has lost public favor and nearly all of her sponsored cooking and cookware relationships. Consider “The Juice”, Mr. Simpson, won in court but completely lost the public’s faith and adoration.

Now, let’s kick that social media influence into reverse. It spawned the Arab Spring, Occupy Wall Street and was credited with having won President Obama’s campaign for him on many levels.

It’s a big, red flashing warning, brands: Do NOT under estimate the power of social media. We live in a world where perception is everything, and people who understand the power of social networking are using Facebook, Tumblr, Twitter, Path, YouTube, SnapChat, Digg, Google and many others to shape perceptions and win others over to their points of view – regardless of the facts.

Specialized exists in the passionate niche and very tight community of cycling, stalwart fans of everything two-wheeled. Their current customer is highly connected to the industry and industry news. But the emerging customer base, the millennials, live on and live by social media on level unmatched by any other demographic. I found posted on Website Magazine, a recent study of the millennial mindset conducted by Edelman Worldwide, the exhaustive study makes one thing abundantly clear: Brands Matter.

As is trending for brands in all categories all over the world, the millennial generation are the new purveyors of cool. They love small, quirky, authentic brands – ones with heart and soul. Don’t be surprised when the best of the small brands take over the category, think: Salsa, Foundry, Niner, Yeti…

It was posted on the Cochrane Eagle on December 12th, that Mike Sinyard, CEO of Specialized, and Dan Richter have sat face-to-face and came to terms with everything. Mr. Sinyard apologized and Mr. Richter graciously accepted that apology. I’m glad for Dan. However, Mike needs to go a step further – a giant step forward. He needs to apologize to Specialized fans and customers in a big way. Surely, Specialized’s CMO knows it is much easier to keep the brand fans that you already have than it is to acquire new ones. Not embracing that will be a deeply regretful and painful lesson.

There are posts by fans so outraged, that they won’t even ride their Specialized bikes in public now, too ashamed to have an association with the brand. Folks have declared that they have thrown out all of their Specialized equipment or that they will forevermore abstain from purchasing anything Specialized or have any association with the brand whatsoever. And ironically, on the flip side, Richter’s Facebook followers for Cafe Roubaix Bicycle Studio have jumped from just 500 to over 12,000 in a single week and Cafe Roubaix has sold out of T-shirts. Perhaps best of all, the accidental “advertising” he has garnered from this whole situation is priceless and indelible.

I found the Urban Dictionary’s definition of “Epic Fail” wholly appropriate here: A complete and total failure when success should have been reasonably easy to attain. So what will the ultimate cost of brand infringement cost be to Specialized?

Well, they could have gone the utterly gracious Jack Daniels route and leased the Roubaix for a pittance, for example. Perhaps even given this war-torn gentleman several of their top-of-line Roubaix bikes and embraced what they could have alternatively perceived as total flattery – his use of “their” trademark name? It could have been a great brand building venture and a shining PR move. They could still try to do something… though the longer it goes, it’s doubtful that it would be perceived as authentic. They should have been posting their apologies and detailing the leasing agreement they made with Mr. Richter on their Facebook page or on their site or, at least, responded to the media requests for contact. It’s fundamental Mr. Sinyard. We all learned it from storybooks as children – all those people blasting their distain through their mobile devices – if you are the giant, you don’t squash the little guy! Noblesse oblige, Specialized, noblesse oblige.

The ultimate cost to Specialized will be known in a few months. But for all the outrage and revolt, it would have been much cheaper for Specialized to handle Mr. Richter, in a more dashing Jack Daniels style. Lease the name to Mr. Richter for a dollar a year along with an expedient, decorous and noble note wishing him well and continued success with his shop. It seems fitting and hardly cliché, to say that Specialized is, most regretfully, days late and a dollar short.